March 24, 2008

 

US Wheat Outlook on Monday: Seen firmer on overnight, technical rebound

 

 

U.S. wheat futures are expected to start Monday's day session higher on firmer trade overnight and a technical rebound from heavy losses last week, traders said.

 

Benchmark Chicago Board of Trade May wheat is called to open 10 to 15 cents per bushel higher. In overnight electronic trading, CBOT May wheat finished up 17 1/2 cents at US$10.05.

 

Kansas City Board of Trade May wheat overnight jumped 12 1/4 cents to US$10.44 1/4. Minneapolis Grain Exchange May wheat rose 18 cents to US$12.95.

 

Wheat futures are bouncing a bit after falling sharply last week amid jitters about the economy, traders said. Follow-through buying from the overnight should be supportive, although there could be some pressure from weakness in crude oil and gold, they said.

 

It is helpful to the bulls that Turkey's state grain board issued a tender Friday to buy 250,000 metric tonnes of milling wheat, a CBOT floor analyst said. The bidding deadline is March 26, and shipment is sought by the end of April.

 

Turkey on March 19 said it bought a total of 190,000 tonnes of milling wheat after issuing an earlier tender for 500,000 tonnes. Some 30,000 tonnes was from Kazakhstan and the remaining from European Union countries.

 

Still, last week's losses inflicted "serious near-term chart damage" on wheat and the setback strongly suggests a market top is in place, a technical analyst said. U.S. wheat markets were closed Friday in observance of Good Friday.

 

Bulls' next upside price objective is to push and close CBOT July Wheat, which represents the new crop, above solid resistance at US$10.48, which would fill on the upside Thursday's downside price gap on the daily bar chart, the technical analyst said. The next downside price objective for the bears is pushing and closing prices below psychological support at US$9.00, he said.

 

First resistance is seen at US$10.00 and then at US$10.25. First support lies at today's low of US$9.63 and then at US$9.50.

 

At the KCBT, a bearish double-top reversal pattern is seen playing out on the daily bar chart for the July wheat, the analyst said. The bulls' next upside price objective is pushing July wheat above resistance at US$10.88, which would fill on the upside today's downside price gap on the daily bar chart, he said.

 

The bears' next downside objective is pushing and closing prices below solid support at today's low of US$10.00. First resistance is seen at US$10.60 and then at US$10.88. First support is seen at Thursday's low of US$10.00 and then at US$9.65.

 

China's wheat prices were mostly stable in the week to Monday, with prices in some regions slightly lower on weak demand. China's spring planting this year faces threats from a severe drought, rising prices of fertilizer and seedlings, and earlier snow storms that hurt agricultural infrastructure, the Agriculture Ministry said.

 

In the U.S., top soils and sub-soils over the Plains' western wheat belt will continue to trend drier this week, DTN Meteorlogix said. Rain will be needed for crop development during the coming weeks, the private weather firm said.